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  • President Trump Unveils His Tax Reform Plan

    Today in Indiana, President Trump unveiled his tax reform plans.

    Will you be able to file your taxes on a single sheet of paper as promised? We shall see.

    Read the entire plan below.

     

    Click here to read the entire plan: UNIFIED FRAMEWORK FOR FIXING OUR BROKEN TAX CODE
    SEPTEMBER 27, 2017

     

     

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    President Trump has laid out four principles for tax reform: First, make the tax code simple, fair
    and easy to understand. Second, give American workers a pay raise by allowing them to keep more
    of their hard-earned paychecks. Third, make America the jobs magnet of the world by leveling the
    playing field for American businesses and workers. Finally, bring back trillions of dollars that are
    currently kept offshore to reinvest in the American economy.

    The President’s four principles are consistent with the goals of both congressional tax-writing
    committees, and are at the core of this framework for fixing America’s broken tax code.
    Too many in our country are shut out of the dynamism of the U.S. economy, which has led to
    the justifiable feeling that the system is rigged against hardworking Americans. With significant
    and meaningful tax reform and relief, we will create a fairer system that levels the playing field
    and extends economic opportunities to American workers, small businesses, and middle-income
    families.

    The Trump Administration and Congress will work together to produce tax reform that will put
    America first.

    OVERVIEW
    It is now time for all members of Congress — Democrat, Republican
    and Independent — to support pro-American tax reform. It’s time
    for Congress to provide a level playing field for our workers, to bring
    American companies back home, to attract new companies and businesses
    to our country, and to put more money into the pockets of everyday
    hardworking people.
    President Donald J. Trump | Milwaukee Journal Sentinel | September 3, 2017

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    GOALS
    The Trump Administration, the House Committee on Ways and Means, and the Senate Committee
    on Finance have developed a unified framework to achieve pro-American, fiscally-responsible
    tax reform. This framework will deliver a 21st century tax code that is built for growth, supports
    middle-class families, defends our workers, protects our jobs, and puts America first. It will deliver
    fiscally responsible tax reform by broadening the tax base, closing loopholes and growing the
    economy. It includes:
    Tax relief for middle-class families.
    The simplicity of “postcard” tax filing for the vast majority of Americans.
    Tax relief for businesses, especially small businesses.
    Ending incentives to ship jobs, capital, and tax revenue overseas.
    Broadening the tax base and providing greater fairness for all Americans by closing
    This unified framework serves as a template for the tax-writing committees that will develop
    legislation through a transparent and inclusive committee process. The committees will also
    develop additional reforms to improve the efficiency and effectiveness of tax laws and to effectuate
    the goals of the framework. The Chairmen welcome and encourage bipartisan support and
    participation in the process.
    special interest tax breaks and loopholes.

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    TAX RELIEF AND SIMPLIFICATION FOR AMERICAN FAMILIES
    Over the last decade too many hard-working Americans have struggled to find good-paying jobs, make
    ends meet, provide for their families and plan for their retirement. They are the focus of this framework.
    Strengthening and growing the middle class, and keeping more money in their pockets, is how we build
    a stronger America. By lowering the tax burden on the middle class, and creating a healthier economy,
    we can give American families greater confidence and help them get ahead. At the same time, taxpayers
    deserve a system that is simpler and fairer. America’s tax code should be working for, not against, middleclass
    families.

    “ZERO TAX BRACKET”
    Under the framework, typical middle-class families will see less of their income subject to federal
    income tax.
    The framework simplifies the tax code and provides tax relief by roughly doubling the standard
    deduction to:
    $24,000 for married taxpayers filing jointly, and
    $12,000 for single filers.
    To simplify the tax rules, the additional standard deduction and personal exemptions for the taxpayer
    and spouse are consolidated into this larger standard deduction. This change is fundamental to a
    simpler, fairer system.
    In combination, these changes simplify tax filing and effectively create a larger “zero tax bracket” by
    eliminating taxes on the first $24,000 of income earned by a married couple and $12,000 earned by a
    single individual.

    INDIVIDUAL TAX RATE STRUCTURE
    Under current law, taxable income is subject to seven tax brackets. The framework aims to consolidate
    the current seven tax brackets into three brackets of 12%, 25% and 35%.
    Typical families in the existing 10% bracket are expected to be better off under the framework due
    to the larger standard deduction, larger child tax credit and additional tax relief that will be included
    during the committee process.
    An additional top rate may apply to the highest-income taxpayers to ensure that the reformed tax code
    is at least as progressive as the existing tax code and does not shift the tax burden from high-income to
    lower- and middle-income taxpayers.
    The framework also envisions the use of a more accurate measure of inflation for purposes of indexing
    the tax brackets and other tax parameters.

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    ENHANCED CHILD TAX CREDIT AND MIDDLE CLASS TAX RELIEF
    To further simplify tax filing and provide tax relief for middle-income families, the framework
    repeals the personal exemptions for dependents and significantly increases the Child Tax Credit.
    The first $1,000 of the credit will be refundable as under current law.
    In addition, the framework will increase the income levels at which the Child Tax Credit begins
    to phase out. The modified income limits will make the credit available to more middle-income
    families and eliminate the marriage penalty in the existing credit.
    The framework also provides a non-refundable credit of $500 for non-child dependents to help
    defray the cost of caring for other dependents.
    Finally, the committees will work on additional measures to meaningfully reduce the tax burden on
    the middle-class.

    INDIVIDUAL ALTERNATIVE MINIMUM TAX (AMT)
    The nonpartisan Joint Committee on Taxation (JCT) and the Internal Revenue Service (IRS)
    Taxpayer Advocate have both recommended repealing the AMT because it no longer serves its
    intended purpose and creates significant complexity. This framework substantially simplifies the
    tax code by repealing the existing individual AMT, which requires taxpayers to do their taxes twice.

    ITEMIZED DEDUCTIONS
    In order to simplify the tax code, the framework eliminates most itemized deductions, but retains
    tax incentives for home mortgage interest and charitable contributions. These tax benefits help
    accomplish important goals that strengthen civil society, as opposed to dependence on government:
    homeownership and charitable giving.

    WORK, EDUCATION AND RETIREMENT
    The framework retains tax benefits that encourage work, higher education and retirement
    security. The committees are encouraged to simplify these benefits to improve their efficiency and
    effectiveness. Tax reform will aim to maintain or raise retirement plan participation of workers and
    the resources available for retirement.

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    OTHER PROVISIONS AFFECTING INDIVIDUALS
    Numerous other exemptions, deductions and credits for individuals riddle the tax code. The
    framework envisions the repeal of many of these provisions to make the system simpler and fairer
    for all families and individuals, and allow for lower tax rates.

    DEATH AND GENERATION-SKIPPING TRANSFER TAXES
    The framework repeals the death tax and the generation-skipping transfer tax.

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    Small businesses drive our economy and our communities, and they deserve a significant tax cut. This
    framework creates a new tax structure for small businesses so they can better compete. Furthermore,
    America’s outdated tax code has fallen behind the rest of the world – costing U.S. workers both jobs
    and higher wages. In response, the framework puts America’s corporate tax rate below the average of
    other industrialized countries and promotes greater investment in American manufacturing.

    TAX RATE STRUCTURE FOR SMALL BUSINESSES
    The framework limits the maximum tax rate applied to the business income of small and familyowned
    businesses conducted as sole proprietorships, partnerships and S corporations to
    25%. The framework contemplates that the committees will adopt measures to prevent the
    recharacterization of personal income into business income to prevent wealthy individuals from
    avoiding the top personal tax rate.

    TAX RATE STRUCTURE FOR CORPORATIONS
    The framework reduces the corporate tax rate to 20% – which is below the 22.5% average of the
    industrialized world. In addition, it aims to eliminate the corporate AMT, as recommended by the
    non-partisan JCT. The committees also may consider methods to reduce the double taxation of
    corporate earnings.

    “EXPENSING” OF CAPITAL INVESTMENTS
    The framework allows businesses to immediately write off (or “expense”) the cost of new
    investments in depreciable assets other than structures made after September 27, 2017, for at least
    five years. This policy represents an unprecedented level of expensing with respect to the duration
    and scope of eligible assets. The committees may continue to work to enhance unprecedented
    expensing for business investments, especially to provide relief for small businesses.

    INTEREST EXPENSE
    The deduction for net interest expense incurred by C corporations will be partially limited. The
    committees will consider the appropriate treatment of interest paid by non-corporate taxpayers.
    COMPETITIVENESS AND GROWTH FOR ALL JOB CREATORS

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    OTHER BUSINESS DEDUCTIONS AND CREDITS
    Because of the framework’s substantial rate reduction for all businesses, the current-law domestic
    production (“section 199”) deduction will no longer be necessary. Domestic manufacturers will see
    the lowest marginal rates in almost 80 years. In addition, numerous other special exclusions and
    deductions will be repealed or restricted.

    The framework explicitly preserves business credits in two areas where tax incentives have proven
    to be effective in promoting policy goals important in the American economy: research and
    development (R&D) and low-income housing. While the framework envisions repeal of other
    business credits, the committees may decide to retain some other business credits to the extent
    budgetary limitations allow.

    TAX RULES AFFECTING SPECIFIC INDUSTRIES
    Special tax regimes exist to govern the tax treatment of certain industries and sectors. The
    framework will modernize these rules to ensure that the tax code better reflects economic reality
    and that such rules provide little opportunity for tax avoidance.

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    THE AMERICAN MODEL FOR GLOBAL COMPETITIVENESS
    The framework puts America on a level international playing field and puts an end to the
    incentives for shipping jobs overseas.

    TERRITORIAL TAXATION OF GLOBAL AMERICAN COMPANIES
    The framework transforms our existing “offshoring” model to an American model. It ends the
    perverse incentive to keep foreign profits offshore by exempting them when they are repatriated
    to the United States. It will replace the existing, outdated worldwide tax system with a 100%
    exemption for dividends from foreign subsidiaries (in which the U.S. parent owns at least a 10%
    stake).

    To transition to this new system, the framework treats foreign earnings that have accumulated
    overseas under the old system as repatriated. Accumulated foreign earnings held in illiquid assets
    will be subject to a lower tax rate than foreign earnings held in cash or cash equivalents. Payment
    of the tax liability will be spread out over several years.

    STOPPING CORPORATIONS FROM SHIPPING JOBS AND CAPITAL OVERSEAS
    To prevent companies from shifting profits to tax havens, the framework includes rules to protect
    the U.S. tax base by taxing at a reduced rate and on a global basis the foreign profits of U.S.
    multinational corporations. The committees will incorporate rules to level the playing field between
    U.S.-headquartered parent companies and foreign-headquartered parent companies.


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